By Marc Siegel
A month ago, U.S. Health and Human Services Secretary Kathleen Sebelius sent a letter to the president of America’s Health Insurance Plans stating that the impact on insurance premiums from “the new consumer protections and increased quality provisions” of the new health reform law “will be minimal … no more than 1% to 2%.” Sebelius warned Karen Ignagni that there would be “zero tolerance” for insurers blaming unjustified premium increases on the new law. Talk about subtle.
Sebelius’ threat, though, obscures a larger problem: The new health care law mandates and extends the kind of insurance that breeds overuse, thereby driving up costs and premiums. And here I thought the reform intended to reduce costs.
As the details of this massive government-led health care overhaul begin to trickle out, let me be clear (to borrow the president’s go-to phrase): The medical system is about to be overwhelmed because there are no disincentives for overuse.
ObamaCare was lauded by many for covering all Americans with pre-existing conditions. That’s not the issue. We’re going to get into trouble because of the kinds of coverage that the new law mandates. There are no brakes on the system. Co-pays and deductibles will be kept low, and preventive services will have no co-pays at all. That sounds like a good deal for patients, yes? But without at least a pause to consider necessity and/or cost, expect waiting times to increase, ERs to be clogged and longer lead times needed to make an appointment.
Patients with new Medicaid cards who can’t find a doctor will go where? To emergency rooms. The escalating costs of these visits (necessary and unnecessary) will be transferred directly to the American public, both in the form of taxes as well as escalating insurance premiums.
Beginning in 2014, insurance exchanges will be set up in every state so that individuals can choose a health insurance plan. This will help control costs, right? Wrong. Don’t expect to find individually tailored plans or those with higher deductibles or co-pays. They won’t be there because they can’t receive the government stamp of approval.
In the new system, my patients will be able to see me as often as they’d like. But will they get the same level of care? I don’t think so. I anticipate that more expensive chemotherapies and cardiac stents or transplants, for instance, will have a tougher time being approved, as is already the case in Canada.
Over on the public side, the new Independent Payment Advisory Board — established by the health reform law to “recommend proposals to limit Medicare spending growth” — will advise Medicare that some treatments are more essential and more cost-effective than others. I believe that value judgments inevitably will have to be made, reducing my options as a practicing physician. Private insurers will follow suit, as they often do.
During the battle over this reform, you often heard, even from President Obama, that you’d be able to keep the plan you have. What he didn’t say — but what we now know — is that because of this new law, the private markets will have to remake their plans, that the costs will rise and that the plan you were told you could “keep” is in all likelihood no longer available. But when your plan changes, backers of reform will simply blame it on those evil private insurance companies.
The truth is, private health insurance is a low-profit industry, with profit margins of 4% compared with over 20% for major drug manufacturers. With the additional costs of no lifetime caps and no exclusion for pre-existing conditions, these companies will be compelled to raise their premiums in order to stay in business. The individual mandate is supposed to be the tradeoff by providing millions of new customers, but there is no guarantee that this additional volume will preserve profits with all the new regulations. This is what occurred in New York state in 1992, when a new law denied exclusion on the basis of pre-existing conditions.
Every scratch or dent
None of this is terribly surprising. I mean, imagine if your car insurance covered every scratch or dent. Wouldn’t you expect your premiums to rise to meet the expanded coverage? And wouldn’t you expect your auto repair shops to become clogged with cars that didn’t really need to be repaired, competing for time and space with other cars with broken transmissions or burnt-out motors?
If we want lower insurance premiums, we will need to return to a system that favors high deductible, high co-pay catastrophic-type insurance with a built-in disincentive for overuse, such as the kind that some employers have provided as an option up until now. Patients could pay for office visits from health savings accounts or other flexible spending tax shelters. More than 10 million Americans already have such accounts.
Unfortunately, the new law is taking us away from the kind of insurance that compels patients to have more skin in the game. As a result, we’ll all pay in the long run — both financially and with less efficient, perhaps even lower quality, care.
The kind of insurance the new law mandates will, over the years, wear out the health care system in the same way that overuse in orthopedics wears out an elbow or knee joint. This won’t be fun for doctors or, most important, for patients.
Marc Siegel is an associate professor of medicine and medical director of Doctor Radio at NYU Langone Medical Center.